(currently around $250 million in sales). Implicit 

 in this process is the assumption that investment 

 dollars will be easily and inexpensively available 

 throughout theentire period of development. Any 

 such project is a long sequence of decisions, 

 each of which has economic significance to the 

 company for some time in the future. Yet these 

 decisions must be made within the constraints of 

 the current economic environment and its 

 projection into the future. 



The present economic and more importantly the 

 present political environment forces most pru- 

 dent businessmen to the conclusion that the 

 assumption of easily available capital is no longer 

 valid, particularly insofar as it applies to the long- 

 range future. The result is a trend, already 

 apparent in industrial research, toward short- 

 term projects and a definite de-emphasis in the 

 basic and exploratory research. 



Concerning the need for assurance of con- 

 tinuity, D. Furlong, Vice President of Bechtel 

 Corporation, San Francisco, wrote: 



Some mechanism is needed to ensure reasonable 

 levels of continuity in programs of fundamental 

 research. Steady application of talent is needed 

 over the long term to produce useful results, and 

 it is difficult to see how such results can be 

 obtained from crash programs or cyclical fund- 

 ing. 



Donald W. Collier, Vice President- 

 Technology, Borg-Warner Corporation, 

 described some effects of the economic environ- 

 ment upon research: 



The economic recession, coupled with the 

 realization that resources (capital, energy, non- 

 replaceable materials, etc.) are indeed limited, 

 has caused a decided and what may be relatively 

 long term shift in research policy from an 

 outward-looking exploratory one to an inward- 

 looking short term one. Top priority is being given 

 to increasing efficiency, conserving resources 

 and improving effectiveness of our operations. 

 There is a decided backing away from research 

 which is outward looking, expansive, and high 

 risk. This has resulted in research being much 

 more closely tied to current operations, and in 

 some cases the dismemberment and dissipation 

 of longer range research facilities and staffs. 



Albert E. Cookson, Senior Vice President and 

 General Technical Director, ITT, wrote that 

 despite the request of the NSB inquiry letter to 

 restrict concerns over "dollar support", he felt 

 that an adequate and consistent level of funding 

 for R&D remains a matter of paramount impor- 

 tance: 



In the industrial environment, with a reasonable 

 return on investment being impacted by inflation 

 and interest costs, it is becoming an increasingly 

 more difficult task for management to maintain an 

 adequate level of R&D. Considering the urgent 

 short run needs for cost reduction and improve- 

 ment of products required to maintain com- 

 petitiveness and enhance the usefulness of 

 present product lines, the resources that can be 

 allocated to longer range R&D are being squeez- 

 ed to the point where it is very difficult for industry 

 to maintain a viable level of effort. 



Many industrial respondents also shared the 

 judgment of N. B. Hannay, Vice President, 

 Research and Patents, Bell Laboratories, who 

 feared the demise of basic research efforts in 

 contemporary American industry: 



... I would say that the single most critical issue 

 with respect to long-term research in industry is 

 that it is not being done, for the most part. A few 

 companies in a few industries support it, but the 

 bulk of industry has either given it up orneverdid 

 it. I believe that it is critically important for the 

 country to encourage industry in the support of 

 long-term research. 



. . . there are a number of factors that have 

 contributed to this situation. Regulation, anti- 

 trust attitudes, the cost of money, inflation, the 

 lack of faith in many segments of industry that the 

 benefits of long-term research can be captured 

 by its sponsor, and over-emphasis on short-term 

 financial results are among the important causes. 

 If the Federal government were to adopt as public 

 policy a positive attitude toward the encourage- 

 ment of industrial research, I believe we could 

 reverse the current trend away from long-term 

 research. 



Other industrial respondents supplied their 

 own assessments on determinants of the 



DEPENDABILITY IN FUNDING FOR RESEARCH 



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